Nelnet shares have dropped 6% over the past six months to $131.79, underperforming the S&P 500's 7.7% gain. Analysts point to three concerns: revenue grew at a tepid 5.5% compounded annual rate over five years, return on equity averaged just 8.4% against a sector average of about 10%, and net debt of $7.7 billion against $533 million in EBITDA yields a high 12.9 times net-debt-to-EBITDA ratio. The stock trades at a forward price-to-sales ratio of 2.8 times, but a lack of published profit estimates makes valuation uncertain. The firm recommends avoiding Nelnet and instead suggests looking at a dominant software business.
Nelnet IncAnalysts flag weak revenue growth, low return on equity, and high net-debt-to-EBITDA ratio, recommending to avoid the stock.